Laughter Can Be Retirement Medicine

May 01, 2015

Earlier in the day, I had a conversation with a couple who were convinced that they didn’t have nearly enough money to retire any time soon and this was a very problematic issue for them.While she loved her job and said she planned to work until she’s the oldest employee ever at her company, he is absolutely miserable. Through a reorganization at his company, he now reports to a manager that he absolutely cannot stand and he said he feels like life is being slowly sucked out of him. The new boss, in his view, is an absolute megalomaniac who makes life miserable for everyone in their department. Nearly half of the staff has left for other opportunities within the last 6 months and the workload for those remaining is overwhelming to the point that he feels like his health is being compromised.

He dreads waking up in the morning, hates the walk from the parking garage into the office and feels his whole body tensing up for hours at a time while he is in the office. He takes work home every night and has intense headaches on a very regular basis. A year ago, he loved his job. Today, he feels like it’s killing him.

After hearing his story, I was really hoping that we could find a path to retirement that didn’t end up with him in poor physical or mental health. We started talking about his hobbies and what he likes to do when he isn’t working himself to death. His garage, according to his wife, is a woodworker’s paradise. When he isn’t too busy at work, he is making exquisite furniture for their home and for friends and family. Apparently, he’s amazing because he has had requests from people to make all kinds of things for them.

To him, it was a time-consuming hobby. To his wife, it was a way to have a happy husband who had a way to de-stress that wasn’t harmful to his long term health. To me, it was a  potential income source that could offset the loss of his income.

We looked at his financial life and at age 57, he had nearly a million dollars in his 401k and he had a pension that he could start at any point. Granted, the payout was higher if he could wait a few years, but in a pinch, he could take the pension payout any time after 55.  He started with his company at age 21 and the pension was frozen in a merger several years ago, so the benefit was relatively fixed with only a slight increase annually.

We looked at their monthly expenses and the biggest one was the mortgage, which was $2,000/month. The good news is that they only had $70,000 remaining on the mortgage and had about $80,000 in savings because their daughter had received a college scholarship and that was money that they had earmarked for her education. When we looked at their other expenses, they needed roughly $5,000 per month (on top of the mortgage) to cover monthly costs.

I asked if they had considered paying off the mortgage, and they had considered it and wanted to do it but wanted to wait to see if it made sense. I thought it could help them release the stress in his life. They needed $5,000/month, not $7,000 if they paid off the mortgage. She was bringing home $3,000. His pension was going to be a little over $1,000, but he was concerned that because he was not yet 59 ½, he couldn’t access his 401k funds without getting clobbered with taxes.

He saw the $1,000/month gap as what wouldn’t allow him to retire. Then I asked if he had all day to do his woodworking if he thought he could earn $1,000/month in furniture.  That’s when he started laughing!

The prior night, a neighbor had offered to pay him $1,000 for a dining room table that he thought he could complete in under a week. That gave him three more weeks to find other pieces to build for people who had been asking him for years for a particular customized item. I could see the gears turning in his head and he saw a business opportunity. His joy was palpable and in his mind, he was no longer trapped.

When I broke the news to him that his big 401k could be accessed prior to 59 ½ if he hit a dry spell in woodworking (if you work at a company until age you’re at least 55 and are separated from service, you can withdraw from that employer plan’s without the 10% early withdrawal penalty), I thought he was going to jump across the table and hug me! He could see a path forward. With his woodworking, his wife’s income, his pension, paying off the mortgage, accessing the 401k on an as-needed basis, the pieces of the puzzle all fit together and allowed him to consider retiring! We didn’t even talk about Social Security being available at age 62 if needed.

I watched a man go from a walking full-body stress factory to a man smiling and laughing loudly at the various ways he could tell his new boss goodbye (none of which are suitable for print!). His wife was delighted that he would be able to be “him” again because she was concerned that he wasn’t going to last much longer, physically or emotionally, in his current job. The time had come for change, and his laughter was the surest sign to me that he was going to make it. I’m looking forward to our next conversation to hear about how he resigned!